Suppose Overall materiality=1 CR
Performance materiality=75 lacs
Threshold =10 lacs
Now aggregate uncorrected misstatements (I.e. Purre total misstatements Jo add karenge at end of audit) should be less than 10 lacs(threshold limit) or they should be less than 75 lacs(performance materiality level)?
Say if aggregate uncorrected misstatements =20 lacs then what opinion to be issued?
Say if aggregate uncorrected misstatements =80 lacs then what opinion to be issued?
Say if aggregate uncorrected misstatements =1.1 crore then what opinion to be issued?
Also In the case of uncorrected misstatements being 80 lacs there is also a possibility of there being undetected misstatements because we have done sampling. Therefore although we have detected misstatements of 80 lacs which are uncorrected the actual misstatements might be greater than 1 crore because of undetected misstatements. So will the possibility of adverse opinion arise in case of uncorrected misstatements of 80 lacs too????
Threshold ??? This terminology is not in SA 320. I am assuming you mean to say limit for misstatements which are clearly trivial.
If its below clearly trivial limit ignore such misstatements.
If it crosses such limit but its below performance materiality (20 lakhs) then inform management and ask them to rectify, even if they dont rectify ask for written representation that its not material and just document it no need to report
If it crosses performance materiality (80 lakhs), inform management ask for rectification if they dont agree qualify. Same treatment if its 1.1 crore, if its pervasive give adverse opinion
we have kept gap of 75 lakhs to 1 crore for undetected or uncorrected misstatements, so no need to worry about them, post performance materiality we will start qualifying.